How does DMP ding your credit?
Date: Wed, 03/17/2010 - 18:05
Very cool and informative community here.
I am close to entering a debt management program with a reputable "non profit" credit counseling outfit, as my debt has grown into the six figures and I am stretched pretty thin after making only minimum payments. I am still on time, but my debt is excessive.
I have always had great credit, never late. But my score has been affected by the number of maxed out accounts with high balances. Given the circumstances my score is OK, at 719.
If creditors begin noting "DMP" on my file, what does this really mean in the short term and long term?
Thanks for any insight.
I don't think they note DMP on your credit. What dips the score
I don't think they note DMP on your credit. What dips the score is that you have to stop paying your cc in order for them to get behind enough that the cc companies will offer you a settlement. The other reason that they get behind is that if you don't already have the money to do the settlements then you have to send money to your dmp company and let it accumulate in their accounts until there is enough to make some settlement payments. While you are accumulating money, your credit starts showing 30 days late then 60 days late etc. That is what dings the score.
Then after you are done your cc tradelines will show "settled less than full" or something like that. Some people say you can negotiate that portion out but I think that is pretty tough.
Now the good news. My mortgage contacts all tell me that if you reestablish good credit right away that you will have your score rebound pretty quickly. It is much much better than a bankruptcy. BKs are on your credit 10 years and everything will absolutely be off your report in 7 if you simply settle the accounts.
In reviewing my credit report, several of my credit card compani
In reviewing my credit report, several of my credit card companies DID note on my credit report that the account was being handled by a financial counseling program. And those accounts are listed under the negative items. So I would say from experience that a DMP DOES impact your credit rating.
Quote:Originally Posted by AnonymousI don't think they note DMP
Quote:
Originally Posted by Anonymous I don't think they note DMP on your credit. What dips the score is that you have to stop paying your cc in order for them to get behind enough that the cc companies will offer you a settlement. The other reason that they get behind is that if you don't already have the money to do the settlements then you have to send money to your dmp company and let it accumulate in their accounts until there is enough to make some settlement payments. While you are accumulating money, your credit starts showing 30 days late then 60 days late etc. That is what dings the score. Then after you are done your cc tradelines will show "settled less than full" or something like that. Some people say you can negotiate that portion out but I think that is pretty tough. Now the good news. My mortgage contacts all tell me that if you reestablish good credit right away that you will have your score rebound pretty quickly. It is much much better than a bankruptcy. BKs are on your credit 10 years and everything will absolutely be off your report in 7 if you simply settle the accounts. |
Thanks for the info, but just to clarify...I'm not seeking "settlements", nor will I be delinquent on any accounts. Going the route of debt management through credit counseling.
Quote:Originally Posted by AnonymousI don't think they note DMP
Quote:
Originally Posted by Anonymous I don't think they note DMP on your credit. What dips the score is that you have to stop paying your cc in order for them to get behind enough that the cc companies will offer you a settlement. The other reason that they get behind is that if you don't already have the money to do the settlements then you have to send money to your dmp company and let it accumulate in their accounts until there is enough to make some settlement payments. While you are accumulating money, your credit starts showing 30 days late then 60 days late etc. That is what dings the score. Then after you are done your cc tradelines will show "settled less than full" or something like that. Some people say you can negotiate that portion out but I think that is pretty tough. Now the good news. My mortgage contacts all tell me that if you reestablish good credit right away that you will have your score rebound pretty quickly. It is much much better than a bankruptcy. BKs are on your credit 10 years and everything will absolutely be off your report in 7 if you simply settle the accounts. |
Thanks for the info, but just to clarify...I'm seeking a debt management plan through credit counseling and will remain current on all payments.
Debt management puts you in a situation where you are not paying
Debt management puts you in a situation where you are not paying as agreed or your normal scheduled payment. The councelling service will also ask that your interest rate be reduced which is not paying as agreed. Also with consumer credit councelling, they do require you to close your credit cards, which will lower your credit right there. CCCS
